Finance minister Nirmala Sitharaman expressed concerns about possible cartelisation in markets and stressed on the need to look into the causes of short supply of commodities — amid raging inflation that threatens to derail growth.
“There are very many stages at which disruptions are coming in. Are they genuinely disruptions caused by Covid or war.
“There is a need to look into these disruptions, look into the causes for the short supply and also assure that there are no monopolistic or duopolistic situations causing either price hikes or supply manipulations,” the minister said at an event of the Competition Commission of India.
The minister said there are grievances against the input costs of materials rising in spite of India having quite a big capacity to meet its own demands and exports.
While wholesale inflation in April rose to a nine-year high of 15.08 per cent, retail inflation jumped to a near 8-year high of 7.79 per cent in April, remaining above the Reserve Bank’s inflation target for the fourth straight month.
The RBI earlier this month hiked its key interest rate0.40 per cent and cash reserve ratio 0.50 per cent in a surprise move meant to check prices.
There is a global shortage of commodities and raw materials as well as disruptions in the value chains and supply chains because of the pandemic and the war situation in Eastern Europe, she noted.
Addressing the 13th annual day function of the Competition Commission of India (CCI) in the national capital, Sitharaman said there are disruptions of various kinds.
The CCI has stood up and met the challenges with a lot more positivity.
“Challenges are getting more complex, more nuanced and more technology-driven. So, the Competition Commission will have to have such skill sets so that you are
never behind the curve and you are on top of the issues,” she said.
According to her, cartelisation is going to be a challenge because of companies scaling up and growing into areas which are of great demand.
“There could be a situation where cartelisation is a possible threat... Cartelisation is the larger word I am using and cartelisation itself is a self-explanatory word but I am also bringing smaller elements of other things which eventually make commodities more expensive,” the minister said.
She said the government wants the recovery from the pandemic to be distinctly clear and speedy, adding companies have to scale up to and meet new challenges.
"Scaling up is a proposition before us and it has to be happening in the market. Therefore, CCI will have to be very understanding of what is happening... generally on what is this scaling up leading to.
"There is a need for a proactive understanding of whatever developments in the name of mergers and acquisitions... I am not saying that you straight away engage based on what you have understood but the knowledge you keep acquiring... is going to keep you informed better in handling cases," Sitharaman said.
